DOWN TURN OF INDIAN ECONOMY…!!!

While Central Statistics Office (CSO) projected economic growth at 5% in the financial year,Finance Ministry announced it to 5.5% by the end of March, 2013. Whether its 5% or 5.5%, records reveal this growth rate to be the lowest in the decade. The projected growth has received criticism from various economists, RBI officials, political parties and others. Lets take a look at the reasons behind the decline in the economic growth rate in the financial year 2012-13:

1. SLOW GROWING AGRICULTURAL SECTOR- Agricultural sector has always been a major concern for the Indian economy. Almost, 50% of the country’s workforce depends on this vast sector for their livelihood. However, its share in the country’s GDP is less than 20%. Particularly, in the financial year 2012-2013, there has been a decline in the output of various crops and consequently this sector grew at the rate of 2.8%.

2. DECLINE IN THE GROWTH RATE OF MANUFACTURING SECTOR- Various studies have revealed that the growth rate in manufacturing sector was 2.5% in year 2012-13 as against 7.6% in 2011-2012. In the seminar held at National Council of Applied Economic Research (NCAER) on “State of the Economy”, it was announced that-“manufacturing sector alone in the first half of the fiscal year 2012−13 declined steeply to a whopping 0.49 per cent, which is a record decline and acts as a severe pull-down factor for the growth of GDP”.

3. DETERIORATING MINING SECTOR-Year 2012-13 marked the failure of the mining sector. Negative growth rate in this sector was one of the major causes for the current retarded growth. According to reports, mining activities were banned in Karnataka and then in Goa which proved costly to this sector.The growth rate steadily declined from 5% to -0.9%.

Apart from above mentioned reasons,diminishing retail sector, inflation, down turn of service sector, reduction in tourism,fall in the value of rupee due to Eurozone crisis and slowdown of US economy have equally contributed to the decline in the economic growth. After witnessing growth rate at 8% or more in the previous years, the current growth rate is a majowr set back for the developing Indian Economy. If we really aim at becoming world power, the current growth rate needs to be improved. The need of the hour is to take right reforms with proper organisation and implementation…..